We have previously reported that a chimeric PDGF-alpha/betaR possessing the ligand binding domain of PDGF-alphaR and the intracellular domain of PDGF-betaR was markedly more efficient than PDGF-alphaR in its ability to enhance PDGF-A transforming activity in NIH/3T3 fibroblasts. To determine the region within the cytoplasmic domain of PDGF-betaR which confers this higher transforming activity, we generated several additional PDGF-alpha/betaR chimerae. Analysis of these chimerae predicted that amino acids residues 942-1027 following the tyrosine kinase 2 domain of PDGF-betaR were responsible for the higher transforming activity of PDGF-betaR. Cotransfection experiments indicated that a chimera in which PDGF-betaR 942-1048 sequences were substituted for those in PDGFR-alphaR substantially increased transforming activity of PDGF-A. Our findings define a critical domain within the noncatalytic region of the PDGF-betaR intracellular domain that confers the higher focus forming activity to this receptor. The PDGF-alphaR extracellular immunoglobulin (Ig-) like domains 1-3 contain major determinants for ligand interaction. We report that a deletion of Ig-like loop 3, but not Ig-like loop 1 or 2, of the PDGF-alphaR causes ligand-independent transformation in NIH3T3 cells. Biochemical analyses of the PDGF-alphaR mutant lacking Ig-like loop 3 revealed ligand-independent activation of PDGF-alphaR tyrosine kinase activity and constitutive receptor dimerization. These findings suggest that the Ig-like loop 3 of the PDGF-alphaR contain the major determinants which inhibits receptor dimerization in the quiescent cells and that ligand binding induces receptor activation by neutralizing the inhibitory effect of this domain.